Sony pays $1M to FTC for illegally collecting data on kids

Sony BMG has agreed to pay $1 million in civil penalties after the Federal …

Sony BMG will pay $1 million to the Federal Trade Commission to settle charges that it violated the Children's Online Privacy Protection Act (COPPA) by collecting information on users under the age of 13 without their parents' consent. The FTC says that the civil penalty will match the largest penalty ever paid out in a COPPA case.

The FTC filed a lawsuit against Sony BMG just yesterday in the US District Court in Manhattan. The Commission, suing on behalf of the United States, said that Sony has been operating a number of websites since 2004 in order to promote and advertise its music offerings,. These sites—many of which contain social networking functionality that allow users to create profiles and interact with others—apparently did not restrict users under the age of 13 from registering, despite the fact that the sites claimed that users under 13 would not be able to use the sites.

As a result, the FTC says that Sony had managed to collect personal information on some 30,000 users under the age of 13, including full names, gender, date of birth, e-mail addresses, mobile phone numbers, and full mailing addresses in some cases. On top of it all, Sony did not provide parents with direct notice of its information practices, and did not obtain verifiable consent from parents before collecting this information—all violations of COPPA. In addition to the COPPA violations, the FTC alleged that Sony's practices also violated the FTC Act for unfair or deceptive practices.

It didn't take long to convince Sony to settle. Only a day after the lawsuit was filed, the company agreed to pay the $1 million civil penalty and delete all personal information of those under 13 that it had collected and maintained. Sony is also prohibited from violating any provision of COPPA again, and is required to distribute the FTC's "How to Comply with the Children’s Online Privacy Protection Rule" to all company personnel. Finally, Sony must also link to the children's privacy section of the FTC's web site from its own sites for five years.

"Sites with social networking features, like any Web sites, need to get parental consent before collecting kids' personal information," FTC Chairman William Kovacic said in a statement. "Sony Music is paying the penalty for falling down on its COPPA obligations."